Howard opposes push to scrap Third World debt

Page Tools

Related

Goodwill is gathering momentum at the World Economic Forum as
major political leaders, a rock star and an Australian union boss
call for the cancellation of Third World debt, while Prime Minister
John Howard swims against the flow.

Mr Howard questioned the benefits of writing off debt after
British Chancellor Gordon Brown yesterday called for total debt
relief in a bid to eradicate poverty, the issue topping the agenda
of the 2500 political and business leaders at the annual summit in
Davos this week.

"We will propose to the G7 that there will be 100 per cent
multilateral debt relief so that we can end, once and for all, the
historic and unpayable debts of the poorest countries in the
world," Mr Brown said, sitting alongside ACTU president Sharan
Burrow and Irish rock star and activist Bono at a news conference
on funding the war against poverty.

Mr Brown's pledge was backed by French Finance Minister Herve
Gaymard and had German support, but Mr Howard tried to apply the
brakes to the push for total relief.

"I think the biggest thing the developed world can do to
alleviate poverty is to remove trade barriers," he said. "The
benefits of that are infinitely better than direct aid. Direct aid
works well in some cases.

"In many other cases, because of poor governance, it works very
badly.

"Sovereign debt relief in the short-term rewards the treasuries
of the indebted countries and unless there's a guarantee that that
is then channelled to poverty alleviation, it can be very
unproductive.

"That's not to say we're opposed to all debt relief."

Mr Howard was a vocal participant in a debate earlier in the day
in which he urged the US and Europe to remove some of their
agricultural trade protections. "Obviously Australia has a vested
interest in that, but that would work very much to the advantage of
developing countries as well," he said.

Mr Brown said debt relief would be the major topic at the
meeting of the finance ministers of the Group of Seven (G7)
countries in London next Friday.

He also received acclaim yesterday for his plan to refinance the
International Finance Facility - a mechanism in which the richer
countries top up their aid on a rolling basis to increase funding
for the United Nations Millennium Development Goals.

Mr Brown said that on current progress, these goals for
literacy, health and poverty, which were supposed to be met by
2015, would not be reached until 2150.

His plan was supported by France, Italy, Germany, most EU
countries, Brazil, South Africa, China and India.

Bono described it as a breakthrough for the often-maligned Davos
meeting. "There are moments in these campaigns when you feel the
game change," he said. "Today I knew the game had changed."

But Mr Howard said he needed to study Mr Brown's proposal before
he could comment. He also was cautious when asked about French
President Jacques Chirac's proposals to raise aid by taxing
speculative cross-border financial transactions and international
flights.

"I'd like to study President Chirac's proposals," he said. "I'm
not normally attracted to proposals for new taxes."

In Davos representing the ACTU, as well as in her new capacity
as president of global union body the ICFTU, Ms Burrow said she had
seen a genuine shift from self-interested business priorities to a
concern for the global economy.

Mr Howard also held bilateral talks yesterday with Iran's
Foreign Minister, Kamal Kharrazi, US deputy Secretary of State
Robert Zoellick and US Senate majority leader Bill Frist.